Life insurance offer financial supports for the dependents of the policy holder. There are eight types of life insurance including term, declining balance term, whole, universal, variable, universal variable, survivorship, and first to die life insurance.
Term insurance is the most common life insurance that is purchased by majority of the Americans. The term policy has duration in between 1 – 10 years.
Declining balance term insurance is used to pay off a mortgage. The cost of the premium is fixed throughout the whole term. After the mortgage is settled, the insurance will be useless because it already expired.
Whole life insurance offers permanent protection for as long as you live. A portion of the premium will be used as cash value.
Universal life insurance offers lifetime protection, just like whole life insurance. However, it offers higher earnings in the cash value component. The insurance company can increase or decrease the premium at anytime. The cash values can be withdraws by the policy holder as well.
Variable life insurance allows the policy holder to change the cash value of their policy. The cash value can be invested to increase the earnings such as stock, bond and etc.
Universal variable life insurance offers higher earnings compare to variable life insurance. Despite that, there is no way to prove that the face value will cost more than the death benefit.
Survivorship life insurance covers the lives of two policy buyer. The insurance company will only pay out the compensation if both policy buyers have died.
First to die life insurance offers coverage for two people. The insurer will pay after the first policy buyer died. First to die life insurance is suitable for couples that signed up for a joined mortgage.
